Dish Network 2005 Annual Report Download - page 94

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ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–9
Cash and Cash Equivalents
We consider all liquid investments purchased with an original maturity of 90 days or less to be cash equivalents. Cash
equivalents as of December 31, 2006 and 2005 consist of money market funds, government bonds, corporate notes and
commercial paper. The cost of these investments approximates their fair value.
Marketable and Non-Marketable Investment Securities and Restricted Cash
We currently classify all marketable investment securities as available-for-sale. We adjust the carrying value of our
available-for-sale securities to fair value and report the related temporary unrealized gains and losses as a separate
component of “Accumulated other comprehensive income (loss)” within “Total stockholders’ equity (deficit),” net of
related deferred income tax. Declines in the fair value of a marketable investment security which are estimated to be
“other than temporary” are recognized in the Consolidated Statements of Operations and Comprehensive Income
(Loss), thus establishing a new cost basis for such investment. We evaluate our marketable investment securities
portfolio on a quarterly basis to determine whether declines in the fair value of these securities are other than
temporary. This quarterly evaluation consists of reviewing, among other things, the fair value of our marketable
investment securities compared to the carrying amount, the historical volatility of the price of each security and any
market and company specific factors related to each security. Generally, absent specific factors to the contrary,
declines in the fair value of investments below cost basis for a continuous period of less than six months are considered
to be temporary. Declines in the fair value of investments for a continuous period of six to nine months are evaluated
on a case by case basis to determine whether any company or market-specific factors exist which would indicate that
such declines are other than temporary. Declines in the fair value of investments below cost basis for a continuous
period greater than nine months are considered other than temporary and are recorded as charges to earnings, absent
specific factors to the contrary.
As of December 31, 2006 and 2005, we had unrealized gains net of related tax effect of $41.8 million and $3.3
million, respectively, as a part of “Accumulated other comprehensive income (loss)” within “Total stockholders’
equity (deficit).” During the year ended December 31, 2005, we recorded aggregate charges to earnings for other
than temporary declines in the fair value of certain of our marketable investment securities of $25.4 million, and
established a new cost basis for these securities. During the years ended December 31, 2006 and 2004, we did not
record any charge to earnings for other than temporary declines in the fair value of our marketable investment
securities. In addition, during the years ended December 31, 2006, 2005 and 2004, we recognized realized and
unrealized net gains (losses) on marketable investment securities and conversion of bond instruments into common
stock of $88.6 million, $34.3 million and ($9.0) million, respectively.
The fair value of our strategic marketable investment securities aggregated $321.2 million and $148.5 million as of
December 31, 2006 and 2005, respectively. During the year ended December 31, 2006, our strategic investments, have
experienced and continue to experience volatility. If the fair value of our strategic marketable investment securities
portfolio does not remain above cost basis or if we become aware of any market or company specific factors that
indicate that the carrying value of certain of our securities is impaired, we may be required to record charges to
earnings in future periods equal to the amount of the decline in fair value.